iShares MSCI Hong Kong ETF
A somewhat similar setup is taking shape in shares of the iShares MSCI Hong Kong ETF (EWH), an ETF that mirrors the performance of the Hong Kong stock market. This fund is among the most heavily trending names on Twitter this week.
By and large, correlation between worldwide stocks have been high for the last year, one side effect of the structural risks posed by macro factors like the eurozone debt crisis -- as a result, Hong Kong stocks have had major turning points in common with U.S. stocks.
But while turning points match up, performance doesn't; Hong Kong has shown poor relative strength compared to U.S. indices, making it a good short candidate. Right now this fund is forming a setup similar to a head and shoulders top, the key difference being the fact that it lacks a right shoulder. In spite of the non-textbook nature of this setup, the trading implications are the same.This stock becomes a short candidate on a breakdown below $15, a price level that shares were testing yesterday. If it happens, keep a protective stop at the 50-day moving average.